IPSCO 2006 Annual Report

Form 10K - Note 10 page 2/2

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Net pension expense attributable to the Company’s pension plans for the years ended December 31 includes the following components:

	2006			2005			2004
Defined benefit plans
Service cost for benefits earned	$	8,438		$	5,811		$	4,850
Interest cost on benefit obligations	12,852			11,042			9,849
Actual return on plan assets	(23,026		)	(19,687		)	(11,927		)
Plan amendments	3,230			12,212			—
Actuarial losses	384			28,086			8,693
Costs arising in the year	1,878			37,464			11,465
Differences between costs arising and costs recognized
Return on plan assets	10,001			9,220			3,701
Actuarial gains and losses	(705		)	(25,691		)	(6,250		)
Plan amendments	3,410			(11,221		)	923
Costs recognized in the year	14,584			9,772			9,839
Defined contribution plans	5,312			4,349			3,888
Net pension expense	$	19,896		$	14,121		$	13,727

The following table sets forth the defined benefit plans’ funded status and amount included in the deferred pension balance in the Company’s statement of financial position at December 31:

	2006			2005
Benefit obligation at beginning of year	$	250,958		$	194,331
Service cost for benefits earned	8,706			6,015
Interest cost on benefit obligation	12,852			11,042
Plan amendments	3,230			12,212
Actuarial losses	384			28,086
Benefit payments	(11,543		)	(9,248		)
Currency translation	(882		)	8,520
Benefit obligation at end of year	263,705			250,958
Fair value of plan assets at beginning of year	193,154			153,489
Actual return on plan assets	23,026			19,687
Employer contributions	16,582			22,424
Plan participants contributions	317			277
Benefit payments	(11,543		)	(9,248		)
Currency translation	(1,159		)	6,525
Fair value of plan assets at end of year	220,377			193,154
Funded status at end of year	(43,328		)	(57,804		)
Unamortized actuarial gains and losses	—			66,513
Unamortized past service costs	—			21,249
Net amount recognized	$	(43,328	)	$	29,958
Amounts recognized in the consolidated balance sheets consist of:
Accrued benefit—long-term liability	$	(43,328	)	$	(44,584	)
Prepaid benefit cost	—			1,647
Intangible asset	—			21,249
Accumulated other comprehensive loss	—			51,646
Net amount recognized	$	(43,328	)	$	29,958

	2006		2005
The total accumulated benefit obligation of the Company’s pension plans is:	$	253,101	$	237,656

Amounts applicable to the Company’s pension plans with an accumulated benefit obligation in excess of plan assets are:

	2006		2005
Accumulated benefit obligation	$	242,458	$	227,950
Market value of plan assets	$	209,058	$	183,366

The significant actuarial assumptions adopted in measuring the Company’s accrued benefit obligations as of December 31, 2006 and 2005 follow. To develop the expected long-term rate of return on plan assets assumption, the Company considered the historical returns and the future expectation for returns for each asset class, as well as the target asset allocation of the pension portfolio. Variances between such estimates and actual experience, which may be material, are amortized over the employees average remaining service life.

	2006			2005
Pension expense for the year ended December 31:
Weighted average discount rate		5.0	%		5.8	%
Expected long-term rate of return on plan assets		6.5	%		6.8	%
Weighted average rate of compensation increase		3.5	%		3.5	%

	2006			2005
Benefit obligation as of December 31:
Weighted average discount rate		5.2	%		5.0	%
Weighted average rate of compensation increase		3.5	%		3.5	%

Total cash payments for pension benefits for 2006, consisting of cash contributed by the Company to its defined benefit and defined contribution plans was $21,894 (2005 - $26,773, 2004 - $25,501). Based on the most recent actuarial valuations for funding purposes, the total estimated Company contributions to the defined benefit pension plans for 2007 are $15,429.

Benefits expected to be paid over the next ten fiscal years are as follows:

2007	$	11,153
2008	11,691
2009	12,408
2010	13,422
2011	14,439
2012 - 2016	81,043

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This is an interactive electronic version of IPSCO's 2006 Annual Report, and it is intended to be complete and accurate. The contents of this version are qualified in their entirety by reference to the printed version. A reproduction of the printed version is available in PDF format on this Web site.